NZD/USD jumps 20 pips as New Zealand lowers unemployment forecast
- The NZD finds buyers as Prefu sees a lower unemployment rate for the June quarter.
- NZD/USD jumps 20 pips to hit session highs above 0.6720.
- Risk-on could power stronger gains in the New Zealand currency.
The New Zealand dollar is drawing bids and pushing the NZD/USD pair with New Zealand's pre-election economic and fiscal update (Prefu) lowering the peak jobless rate forecast to 7.8% from 9.8% projected in the budget.
The pre-election update also revised the June quarter gross domestic product (GDP) forecast to -16% from the previous projection of -23.5%.
"The initial economic impact of COVID-19, while still large, has been less severe than anticipated in the Budget Update, with a faster-than-expected move down alert levels, and high-frequency activity indicators suggesting activity has picked up sooner than expected," the report said.
However, inflation is likely to remain low due to weaker commodity prices and a strong exchange rate, the report added. So far, however, markets have ignored the dismal inflation forecast.
The NZD/USD pair has risen from 0.6702 to 0.6722 on the pre-election update but remains well below Tuesday's high of 0.6737. However, that level could come into play during the day ahead if risk sentiment remains strong, keeping the safe-haven greenback under pressure.
The futures tied to the S&P 500 are currently trading flat. Analysts at JPMorgan believe the stock market pullback has ended, according to Bloomberg.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
